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ACCA Strategic Professional · Strategic Business Leader · Management and internal control systems

Marlow Textiles has a head office that sets annual budgets for each factory. Factory managers are rewarded for meeting budgeted cost and output targets, and head office reviews monthly variance reports. Which type of management control is primarily being described?

This is output or results control. Head office sets budgeted targets, monitors variances and rewards managers for achieving cost and output goals, so control is exercised through measured results rather than prescribed actions, hiring practices or shared culture.

  1. ACultural control based on shared values and norms
  2. BOutput (results) control through budgets and variance reportingCorrect
  3. CPersonnel control through recruitment and training
  4. DAction control through rules and approved procedures

Explanation

Budgets with targets, monthly variance reporting and rewards linked to meeting targets focus on the results achieved rather than how they are achieved, which is results (output) control. Action control would instead prescribe the steps staff must follow, and nothing in the case does this.

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